Menlo Park office building bought by major Bay Area developer

MENLO PARK >> A half-century-old office building in the choice Silicon Valley tech and venture capital hub of Menlo Park has been bought by a veteran Bay Area real estate firm for a hefty price.

Ellis Partners and New York State Common Retirement Fund, acting through an affiliate, teamed up to pay $62.7 million for the office building, which is located at 200 Middlefield Road, according to documents filed on June 8 with the San Mateo County Recorder's Office.

“We are thrilled to add this unique asset to our long-term portfolio,” said Jason Morehouse, partner and chief investment officer with Ellis Partners.

Teachers Insurance & Annuity Association of America, a pension fund behemoth, sold the building, which totals 43,100 square feet, the county documents show.

The deal suggests that plenty of investors have yet to slake their thirst for owning office buildings in key job hubs in Silicon Valley, even in the wake of the coronavirus pandemic.

The Ellis Partners affiliate, EPNY Middlefield, obtained a loan of $21.7 million from Nationwide Life Insurance at the time of the purchase, according to the public property records.

The price that Ellis Partners paid for the boutique office building works out to roughly $1,455 a square foot.

That per-square-foot price is one of the highest values ever for office space in Menlo Park, a sought-after Bay Area job hub.

The office building was originally constructed in 1967 as the Mills Building. The building was fully renovated in 2012.

Brokers Steven Golubchik, Edmund Najera, Jonathan Schaefler and Darren Hollak with Newmark, a commercial real estate firm, arranged the property purchase.

In 2019, New York State Common Retirement Fund, a pension fund, said it was committing $200 million to a fund called EPNY Ventures I, which is being managed by Ellis Partners.

“With a highly amenitized courtyard, top-ofthe-line finishes, and abovemarket parking ratio, the building has proven appeal through market cycles,” Morehouse said.

The office building also features a large central courtyard totaling 5,800 square feet, which Ellis Partners said is a crucial component of a workplace in the coronavirus era.

The building is 87% leased, Ellis Partners stated. A venture capital firm, a private equity operation and a software company are among the tenants in the building, according to Google Maps.

“We look forward to working with current and future tenants as the office sector continues its post-pandemic recovery and evolution,” Morehouse said.